Transcripts For BLOOMBERG The Pulse 20141028

There is only one game in town over the next 48 hours. The federal Market Open Committee meeting. Will we have the end of q. E. 3 and how will they signal an increase in Interest Rates whenever that is going to be. Transition from q. E. Ends until the beginning of Interest Rate increases. Lets look at whats happening for euro. Rising for the third day against the dollar. Interest rate expectations are being pushed back in the United States. That benefits the euro. It is up for a third consecutive day against the dollar. It is up by. 10 today. 127. 14. Inally these are the stocks 1. 2714. These are the stocks were watching. It is a busy day for earnings. Earnings beat estimates. Profit missed estimates mainly ecause of legal costs. Lloyds. 9,000 jobs cut. That means various branches will be cut as well. Profit rose. That was a beat but investors obviously choosing to focus on the closedown of the branches and the slashing of jobs as well. U. B. S. Higher. B. P. Higher and european markets higher as well. The ftse 100 up by 41 points. Thats how the market open is shaping up tuesday morning. Lets get some perspective on all the top stories of the day. Were joined by the cohead of global macro and Market Research at goldman sachs. Welcome to the show. Good morning. We have talked so much about this from yellen to draghi of the e. C. B. You guys are calling it the fumble baton pass. Is it a fumble because the e. C. B. Is not ready to pick up where the fed is seemingly about to leave it . I think that is the imfregs market has. That the e. C. B. Is powerless. Hasnt picked up the baton and run with it as expected. I think part of the misunderstanding or this perception has come from the fact that draghi emphasized the Balance Sheet and the fact that it would grow by a trillion and the choice of sates that the e. C. B. Has elected to buy in the eyes of the market is not liquid enough to fulfill this objective and this is where the fumbling comes into play. I was looking at the numbers yesterday. The banks at 1. 7 billion euros of bond purchases last week. Is that bigger than you expected . I think it is a respectable number for the first week. I think it is also interesting to see that Central Banks have cross purchases to the bundesbank would spanish bonds. That shows some risk sharing taking place. From our side, we think that this perception of fumbled baton pass is misplaced. We think actually that is the right approach that the e. C. B. Has taken. They are going after essentially assets sitting on banks Balance Sheets. They are trying to releverage that bank Balance Sheet or help the deleveraging and what they can do. Q. E. 3. It ends. What is it . A whisper that we leave 5 billion on the table and hope 4. Maybe we get q. E. It looks like q. E. 3 will end. It has to be mean something. The deficit of the u. S. Is in a better footing. There is less issuance than we had a few years back. Easury yields are in my view ridiculeously low. There shouldnt be a Fund Pressure and needless to say a constrain on the economy coming from the of longterm rate thats point. Finally ppings, i think whose think it is expected they are going to end these purchases. It will be a bit emotional. I think we can live without them. When we look at when q. E. One ended and q. E. To two. We look at the treasury market on each of those occasions. Is this any different . I think we have this anchoring of the front end. I think the language around a considerable will i say in october. Perhaps will be dropped in december when they have the opportunity with the press conference to elaborate what they are going to do next. You have this on the front end and the decline in oil prices. That is i think the key difference here. When youre looking for what treasury yields will go, youre looking at 3 by the end of next year. This is predicated on what the fed does. That would have been the call at the start of this year as well. What has changed if anything at all over the last 12 months . I think, look, there is the ct that the fed has a dual mandate. They are going to look at inflation. That is probably going to be the highlight that we are in a low inflation market. We think by the Third Quarter next year, there will be a hike in rates and a little bit before that, the market will prepare for the event. That should push up rates from the front end of the curve. The other thing that has happened to treasuries this year is they have been dragged lower by developing in the euro area. The erosion of the premium has been mostly a euro era phenomenal. We think that is going to reverse over the course of 2015 also thanks to the e. C. B. s policy. Stay with us. Because after the break, were going to talk spain, italy and european sovereign debt. A quick look at one of the movers this morning. It is lloyds. Their profit surges but they are cutting jobs. 9,000 of them. You would think that would gave boost the stock. It is down. Ahead of a little bit of nervousness. The e. C. B. Stress test did not fail or rather the e. B. A. Stress est did not fail lloyds. U. B. S. Missed estimates. Well have a chat about that bank after the break as well. Stay with us. On the move is back in two. Welcome back. Im Jonathan Ferro live from london. This is on the move. Lets talk about sovereign debt. Spanish bond yields have dropped to their lowest level in more than two years. For more, lets bring in francesco from goldman sachs. That chart, you can barely see it at the bottom. We have seen a divergeance between italy and spain. Am i starting to look at italy in isolation . Is that whats happening here instead of this blanket periphery trade . Do we start to break it down now . Look. So far this year definitely not. There that is has been one factor meaning Monetary Policy driving all of these spreads together. Higher returns but more volatile in spain or italy or the other. Spain and ireland, have actually outperformed a little because in my opinion the market has been able to separate the banks problems from the sovereigns. Ok . That has been achieved through the bad bank. They took the medicine early on and did the bad bank and people forgot that the two things were relate. Then they started growing. You can call that a bounce given the amount of free fall they had experienced before. Still, if you think about projections for next years growth, spain, ireland are definitely higher than for the rest of the periphery. That takes us to italy. Italy has not take than medicine. For a viret of reasons. They dragged on certain situations for long and now we discovered this weekend that the situations are still there and the country will have to address them. We dont think that the addressing of these situations will involve an intervention by the sovereign. So we dont think this will have an impact on credit worthiness over the republic of italy. However the fact that they still need to fix some banking problems, may have a negative impact on the g. D. P. Outlook. Because some of these banks are very local. They serve Industrial Districts which may suffer as a onsequence of the bank adjustments. Right now, bigger than everyone the with the exception of greece. Going forward, this divergeance, the performance, does that continue . Well, you know, you the Monetary Policy accommodation. I think that helps. You have three quarters of this debt held by italians and they are up to now they have been happy to roll it over. There is a big tax advantage of buying public debt in italy. Finally they are doing stuff on the italian side. The the labor market pays a high dividend in the eyes of the markets. And i think that together with some signs of growth should keep things on an even keel. Having said that, i think growth more than public debt is really the key here for the outlook for the sovereign. Do you think they can generate the kind g. D. P. Growth that is needed to make that debt load sustainable . Is it unrealistic . I think from the supply side they definitely can. Ok . S they do that, i also think that demand will inevitably drop. That is where countercyclical policies will have to kick in. Whether that is a combineags of monetary heavier intervention we have been recommended to be long italy since the start of the year. We closed that position in august just because we didnt understand where things were heading. I think in the next three months or so it will be crucial setting the tone for the 2015 outlook. For the 2015 outlook, germany, the u. S. , u. K. , spain, you just dont think these yields can sustain these levels, but a lot of people are talking about the japanification of the bond market. I dont buy into the japanese analogy. I think the manifestations are the same but the root cause over the problem is completely different. In what way . Down the way that i think the fact that markets can clear and their structural rinledity is of the product markets, labor markets. In japan we have had very low employment. Very low unemployment throughout the crisis. Also the difference is a comprehensive assessment. Banks have been shaken up to a large extent faster than japanese ones. So i think the combination of those things helps. The e. C. B. Has managed to put real rates now negative for the next decade, which is something japan wasnt able to do until much later in its crisis. So all of these things making differences between the two experiences. Just to wrp wrap things up. We started this conversation about the the Federal Reserve to e. C. B. There has been so much talk about the e. C. B. Conducting q. E. For you and for goldman sachs, what does it take to get the e. C. B. To a place where their back is up against the wall and they press the button and execute on sovereign q. E. Or is it not as simple as that . I dont think it is simple as that. Before the course of action buying private assets, buying back assets is the preferred one in the eurozone. I think the reason lies in the fact that unlike in the experience of other countries, the euro area doesnt run a fiscal deficit. The two main beneficiaries of sovereign q. E. , germany and italy in term of size both running a primary surplus. Basically has anfect mainly through portfolio rebalances. If you think about all the constraints in the euro area, they actually skid. Buying private assets is definitely the preferred choice. If the e. C. B. Were to find itself with its back against the wall, that would probably be because growth is going in where, neen the core countries and inflation remains fairly low. In that case, they would need to crease the Balance Sheet quickly and therefore sovereign bonds make the choice. You and i will be talking about that forever. Thank you very much for joining thus morning. As we head to break, check out shares of u. B. S. And lloyds. Both out with earnings this morning. Well break down their announcements next. U. B. S. Up. Lloyds lower. Well break down those moves in two minutes. Welcome back to on the move. Time to head over the switzerland. U. B. S. Profits missed estimates after the bank took litigation charge of almost 2 billion. Caroline hyde sat down with their c. E. O. Good to see you. What did the bank release in terms of details on this charge exactly . Investors dont seem to be too disturbed by it. Stock is higher as we speak. Yeah, youre right. More than 2 , but there is this 1. 8 billion swiss franc charge related to litigation. They are facing a multitude of allegations that they manipulated the Foreign Exchange market. The rate rigging market and also potentially helped u. S. Clients, french clients, belgian clients evade taxes. What is the litigation charge about . It is likely to be relating to the Foreign Exchange investigation. They are currently in negotiations with the department of justice in the United States. We understand they are also discussing with the u. K. Regulators as well. Could we therefore be close to a deal . An exact t get figure unless they are getting close to an idea of what the charge could be. We could see a settlement with the u. S. , with the u. K. Regulators relating to foreign excheaning manipulation. But i think what was much clearer within these numbers and within my interview with sergio was the overall caution. Global risks are higher. Not only is the risk of litigation charges going on for the foreseeable future, you have increase in joee political tension. Bole save a key concern at the moment. Sergio was highlighting u. B. S. , the biggest wealth manager in the world, are hearing from clients and things are looking pretty concerning out there. Have a listen. Complexity e more challenges coming. Geopolitical and i do find that clients Risk Appetite will not change unless we find a solution. I think for the foreseeable future, i would and results to be extremely and subject to changes in those areas. What are your clients telling you up you . Are they nervous . Cautious . They are still very cautious. I think if you look across the they outside mandates, have high 20s in cash over the last four quarters. They are extremely cautious at levels never seen before. Caution at levels never seen before. Thats huge. Clearly the market is worried about the moment, jon. There is also clearly concerns coming out when youre looking at the future for extra hits in terms of litigation. As you sayings the stock is up and looks as though many are looking at these issues. We have seen net new many coming into the Wealth Management unit. We have seen improvements in investor banking. M a is up. They are seeing improvements in profitability. The Silver Lining for investors is that sergio is saying he is confident they will stick to that promise to release 50 more profit as dividends. There is going to be some cash coming back to investors. Investors love that, dont they . Good to see you. Lloyds confirmed it is scaling back its Branch Network by about 6 . With that will go 9,000 jobs over the next three years. With me is a senior banks analyst. What stood out in these numbers for you . Two things are important. One, maintaining the guidance. The lloyds story has been the net interest margin. If anything, the margin 2. 51 suggests that the market might hope for a little more than the guidance. The other thing it speaks to, Standard Chartered. One of the reasons they Revenue Growth led to cross growth. Unfortunately Standard Chartered if you look at lloyds. Nine months and three months, its cost is still growing faster than the revenues. The other leg of the story for lloyds as well, stock down yesterday by 2 . Down again today by almost 2 . Looking ahead to the stress tests in the u. K. Never mind the e. C. B. Ones. What did the results of those stress tests tell you about lloyds and the problems they face . If you look at the way the adverse scenarios attack their character base, it would fall to 6. 2 . The issue with this is of course lloyds has lot of capital. Triggered at 7 . It is not just the absolute capital. It is also Going Forward and funding yourself. Worried that an adverse scenario can eat into your capital. He will be joining me through the morning in the pulse as well. Were going the talk oil majors. Oil gets crushed this year. What does it mean for b. P. . Join me after the break. Welcome back to move. Im Jonathan Ferro. 30 minutes into the trading day. This is how things are shaping up. The ftse up 37 points. 6 . The feds twoday meeting starts today. Q. E. 3 is set to end. There is no whisper that it might continue. Maybe 5 billion on the table of quantitative easing. But the overwhelming majority of the market expects q. E. To finish tomorrow. Can the market stand on its own two feet . I have to say, i saw this movie yesterday. We were up 1 on the dax for about an hour and finished the day lower. Three companies released earnings today. Sanofi. What the hell is going on with sanofi and its chief executive . Those are not my words. Those are the words of an investor as uncertainty prevails about the future of the chief executive officer. Third quarter profit rose 10 . There was a Board Meeting yesterday. He wasnt invited but he still seems to have his position albeit now because no announcement has been made. Pricing in the u. S. Diabetes market has become more challenging recently which will impact sales of its best selling insulin. They starting patent protection next year. Sanofi down by today. Standard chartered 7. 2 lower. Biggest fall since 2013. They forecast a drop in second half droft. They posted a 16 drop in pretax profit in the Third Quarter. Shares down by 7 . Lloyds earnings rose. Third quarter profit up by 41 but the big story today is that it is cutting branches by 150. It is slashing jobs by 9,000 as well. This is the nugget, if you can call it that as well, within the lloyds statement. The push to return to company to private openership and to repaying dividends has been hurt today because it sets aside an additional 9 million pounds. Rising legal costs weighing on lloyds. Slashing jobs. Branches. Big three movers today. Yeah. Big movers, mark. A big move in the fx market. A big move from the Swedish Central Bank. They lowered their key rate to 0 . Ome other headlines. Hey dont see rate rises until the middle of 2016. The outlook for inflation is pretty dire as well. At 0 . K c. P. I. This sounds familiar like the e. C. B. The Swedish Central Bank is fighting a similar battle. Big move in the fx market. That is naqi stocki. Plenty to discuss this morning. Ill bring up the market moves later as well. Lets bring you some of the other top headlines and stories. Pro european parties in ukraine began talks to form a westernfacing coalition. The ukraine than president said Coalition Talks should take no longer than 10 days. Meanwhile russia said it is considering emergency aid requests by war torn regions in the east of the nation. Moscow calls the situation bordering on humanitarian catastrophe. U. B. S. Says the financial industry will continue to face elevated costs for legal and regulatory matters for the foreseeable future after switzerlands biggest bank came in below estimates. U. B. S. Set aside nearly 2 billion. Here is what u. B. S. s c. E. O. Had to say about the litigation. And b. P. Reported 19 quarterly decline in profit this morning. Europes third Biggest Oil Company increased its dividend to 10 cents a share. Meanwhile the oil giant plans to sell more assets. The 2010 gulf of mexico spill may reach 50 billion. Roz wns a 20 stake in face a profit risk because of sanctions on russia. They recently lowered their target for brent down 1053. Jason b, in your words, i want to get to the b. P. Earnings first. Is it a surprise . Are we just looking at the dropoff from last year . It was a pretty good result given the macro environment. It benefits from the fall oil price. It was a strong contributor to the beat we saw. Can that continue if brent stays around 85 a barrel . Can that trend continue where the b. P. s refining story props up the rest company . It could. The business is the overwhelming driver of profitability not just for b. P. But for all integrated oil. The refining business provides a bit of a hedge but if brent stays at 85 it is going to be quite negative for earnings. Lets talk about the crash in brent. We have seen it come down from over 20 since the june highs. All the majors, the big europian majors report this week. Shell, total. Who is most resilient . Who that is thas newer oil fields with the higher margins . Is that shell or b. P. . It is going to be shell. I think shell in particular has a financial structure that is best suited for weathering a low price environment. We calculate they only need 85 brent to be able to fund their capital program. That is far the lowest. I think shell wub a very defensive stock if we go into a prolonged period of low oil price. Look at the refining story, you say b. P. Has done pretty well. Going forward is it a continued decline for the european refiners versus the u. S. Refiners . Is that story continuing . Yes, i think so. I see european refining as a broken industry. The u. S. On the other hand has a number of advantages including much lower crude speed stock prices coming from canada and coming from the shell boom and it also has a lower input cost to natural gas. I would expect that u. S. Refining is going to be strong and european refining is going to be weak. Going forward, the european refiners are going to suffer from some weakness. Is that total that i need to look at . Is that the company that i should be worried about for innings season . That is correct. They are going to have the highest throverple the european funding dynamic. Total, as with the rest of them, is primarily an upstream company but their exposure is going to be greater than for either b. P. Or shell. Quickly, when we look at the u. S. And some of the producers there, the shale producers, the line in the sand im told is 80 a barrel on w. T. I. That it starts to flush out to smaller players. Do you see that playing out or does it need to stay here for a longer period . Where are i think your number is reasonably accurate. That is when you start to see investment scaled back. It takes a period of months for lower investment and the decline curves to actually correct the overall production. You see crude staying at very low levels, 80 or less. Now if we see concerted effort by opec to reign their production levels, then that is not going to be necessary. If opec continues to produce flatout, then that is a scenario that could develop. I guess that is my final question for you. A look ahead to the opec meeting. Saudi arabians now dont look too keen on doing anything. They want to maintain market share and maybe they are a fed up being the swing producer. Does that change going into next month . I think the key point is they dont necessarily want to be the full swing producer. They are going to want to see efforts made by others in addition to their own production levels coming down. If you can put together some form of consensus by november 27, then maybe you mean see some action. I think it is probably going to be sometime in 2015 by the time we see any concerted effort on the part of opec to take crude off the market. Final. Question. I look at total, b. P. , shell. For the viewers out there, is shell the big buy . R it would be wour o big buy. Our big buy. Thank you very much for joining thus morning. Well continue to watch the oil earnings out this week. Tomorrow, total reports results and shell with their report on thursday. Busy, busy week for the oil majors. Well stay on this theme. One company closely tied to the oil and gas industry is t. M. K. You dont know them. Ryan chilcote had a chance to sit down with the russian billionaire behind the company who joins us now with the details. Is he worried about the Lower Oil Price . He is not that worried. What i like about talking to pumpyansky is he has access to the u. S. Markets. He is selling pipes in both. He has a solid order booked for the next six months. Some of the shale producers need a lot more pipe. They are still profitable at 65 a barrel for w. T. I. Were at 81. Oil could continue to fall before he actually hurts, which is prettying the. The russian market, the oil and gas sector hit by the sanctions and yet things are ok there too. 2015, he says they are fully booked in terms of orders for their pipes. Why fingerprint they operate in the convention space. They havent been directly affected by the sanctions. That business is still on. Western companies with their sanction have forbidden some of their pipe producers from shipping their pipes into the country. Finally says russian oil companies, and this is a bit difficult to get your head around, are actually doing ok. The ruble is down. Down again today. Record lows. It is extraordinary. The price of oil has declined less. These guys have their costs in rubles so they are benefiting. The oil makers in russia, the Oil Producers are benefiting from the depreciation of the ruble. They continue to sell in dollars. So they still have their investment programs and are still buying pipes from this guy. Have a listen. We are fully booked for 2015. Despite the sanctions . Despite the sanctions. Because we are the largest steel pipe producer for the oil industry in russia and we are the only company which could provide the full range of products. But some of these projects Going Forward are are not going to happen. It could be postponed, yes, youre right. The amount the total amount of pipe for these projects is not so big. Just out of curiosity. I know you own a u. S. Business. Everybody in the u. S. Looks at it as a u. S. Business, but youre a russian man. In some ways, youre like the bad guy. These Russian Companies are getting sanctioned. Youre a russian billionaire. Has it changed your ability to do business at all in the u. S. . You know, first of all, i never feel something wrong in he direction of me personally. A russian public company. Never feel something negative, you know. Never . No, never. Of course sanctions gave us an additional headache because we ere able to create the chinese american our u. S. , and russian divisions, legal and technical they look together to check all of our not to be sanctions in the european in the u. S. Division and in russia. You walk a fine line. Yes, of course. It is not very good news for us. What do you think about putins policies . President putins policies in the ukraine . They have completely changed the business environment. Ont want to go there . Rule number one, if youre in business in the private sector and a western Reporter Asks you what you think about putins policies . Dont talk about putin. Ryan chilcote. Plenty to discuss on this subject. He will be back in about an hour. Swedish Central Bank Lowers rates by much more than expected. The benchmark rate was 0. 25 . The cut was 15 basis points. They cut the benchmark rate to zero. More than estimated and they have delayed the first rate increase to mid 2016 from the end of 2015. A pretty dire scrout look outlook for inflation. Big move for the swedish kronor. You see naqi stocki. The fight for inflation. Plenty to discuss in this market now. Well be back in two. Welcome back to move. Im Jonathan Ferro from the city of london. Pharma shares are lower. Sam, im going to start with sanofi. Their shares, thats a plunge. That is a big, big number. What is behind the move . So i think what spooked the market, we talked about this a little earlier too. The comments they are talking about their diabetes business. It is biggest section of the pharmaceutical business within sanofi. A single drug accounted for 17. 8 of revenues in the Third Quarter. It is a big one. A Significant Growth provider for the company. For the first time and looked through some other comments made historically. They have been very clear about the fact that they are actually now finally seeing pressure on the environment that others have been seeing on other insulins product. G mass this is what is spooking the market. The c. E. O. . Remember, yesterday we had that news too. The market hardly react. It might have been up a little bit yesterday. This is the driver. What everyone is worried about. They are saying that 2015 growth will be flat on that product particularly. And that they will try to get growth a new product two new products coming into the market in an environment where pricing is tough. People with wondering will they have pricing capability on those products . Novartis bringing new products to the market. Doing well . Yes. This quarter they beat analyst forecasts. They are up almost as much as sanofi was. 9 on the year over year basis. Still gramming with a new product, hypertension product. But what they have managed to do is that the products they have coming through have just managed to cope with that a loss of those revenues. Margins are expanding across the various businesses. A couple of questions for me as we go into the Earnings Call would be they have shown most of d. Beat came from lower r how sustain sble that . R d, you still have to spend. Are they saying this is possible . Shows are the sort of questions you look at. Well talk about that in a couple of hours. Sam will join us later on on the pulse. Big moves in pharma. Sanofi down almost 7 . Novartis up almost 2 . User growth is triggering a selloff in shares overnight. Can twitter convince wall street, im using it maybe you are too. Not enough of your mates are. Well discuss it. Stay with us. Welcome back to on the move. Jonathan ferro live from the city of london. It is time to talk about twitter. Shares slumped in after hours trade. User growth slows in the Third Quarter. Joining us now with more is hans nichols. Hans . More disappointing numbers from this company. Yeah. They simply are not growing as fast as they want to grow if they are going to come close to catching up with facebook. It is the sequential number you want to look at. 284 million. Facebook is at 1. 3 billion. I think sometimes it is hard or at least maybe we should check ourselves as journalists talking about twitter because it is so important among reporters. Yet it is not having the same amount of growth that you would expect a new, a young company, remember, it just went public about a year ago to have. Here is what the c. E. O. Said in an interview. It is the number that we have delivered into the market. We have an aspiration to build the largest daily audience in the world. A couple of good numbers. International sales, 121 million. That gives you about 34 of their sales. They are starting to go where their users are, which is abroad and getting sales out of that nd the number of ad revenue, 1. 77. Every time, 1,000 types you refresh your twitter feed, that is 1. 77 in ad revenue. They are going to need to get that number up higher and organic growth higher. There is an interview with the c. E. O. On Bloomberg Television later. We wont watching it but maybe we can tweet about it. I imagine ill be in bed asleep. Thank you very much. Lets get back to markets. Almost an hour into trading. Equities pushing higher. The Swedish Central Bank has cut rates more than economists anticipated. From 0. 25 to 0 . They said inflation is too low. They will not start raising Interest Rates until inflation picks up. They dont see a rate hike until the middle of 2016. It was the end of 2015. The fight for inflation continues. The question is, if the fed pulls out of quantitative easing, are they willing to tolerate a stronger dollar . Ill be on the pulse. Youre stuck with me for the next two hours. Ill be back in two. The Company Reported a 19 drop in profit. Shares are gaining. Investors are at ease. 2 billionset aside swiss francs for legal issues. Lloyds plans to close some 150 branches and laminate 9000 jobs. Eliminate 9000 jobs. Welcome to the pulse. Live from london, i am Jonathan Ferro. Lets turn to the top corporate story. Europes third law Largest Oil Company declined 19 profits. Give us the details. Wheres the emphasis . Straightforwards earnings. They were 3. 7 billion a year ago. This time around, it is gone down by 5 . Production at bp fell almost 3 . That is part of the explanation. One of the positives is they beat analyst expectations. Cash flow looks like it is doing well. The target for the year was 31 billion. So far, they have gotten to 25 billion. The expectation of the company was that they would be spending 25 billion. They have only spent 23 billion. They juiced the dividend. They changed it . 10 per share. They did not update liabilities for the gulf of mexico spill. They are appealing against that ruling. If they are challenging the ruling that found them grossly negligent for the gulf of mexicos ill. If they lose that challenge, there may be a change to the provisions. The picture in russia is in great. They get 20 . They own a 20 of russias biggest producer. This year, just 100 million to their bottom line. Lets go to the stock. Bp announced the dividend increase. I am joined by the head of equities. Is that the story now . A bit more optimistic. If you look the share price down 14 over the last three months, i would imagine profits are going to be down it. If you look at the list of things that bp is battling against, it is a good performance. I keep getting this mental image of an octopus playing table tennis against several players at once. One is russia. They have a stake in an oil company there. The other is the Lower Oil Price. I was looking through earlier, i was looking for material impact. They are concerned about the situationthe russian and sanctions could be material. It isnt yet. The russian ruble. What seems to be an openended gulf of mexico settlement, they are appealing against the latest ruling. It is run out in terms of money they put aside. That is tending to temper general consensus around the stock. That clout has been hanging over them for a number of years now. Surely the doom and gloom around that story could get better. It is priced in. The is when we can put government to bed. If russian sanctions and tomorrow, that would be another take. Operating cash flows are extremely strong. They have increased the dividend again. It was already yielding over 5 . It is cutting capital expenditure. It is keeping a close Eye Operation on what its doing. Price. S talk about the bite bp . Arting to how tight are the margins on some of those oil fields versus the lights of shell . Always got this difficult situation with the oil price. It is more expensive to get oil out of the ground. It takes oil to get oil out of the ground. By the same token, that should work. It is good for us. It is effectively a tax cut. We have a supply glut as you know. Weve got shell to come later in the week. Straitsd chevron in the states will be on friday. You would expect a similar thing. , they have been able to make that since the gulf of mexico. Suffered in the u. S. Because they have not had access to that very cheap oil that the u. S. Counterparts have. Is saying what bp today. The downstream performance has been a good. It was helped along by the refining environment. At the bp logo and think of oil. They are gases well and gas prices have not taken the hit that oil prices have. That is one of the beacons of a diversified company of this side. It can withstand the shocks the companys. Whether the european refiners are now in a position they look good. Not are youe being overly optimistic . Cautious optimism is the order of the day for the moment. In terms of the strong operating clash fro, they are buying back their own shares. It could do with a couple of things going in. It is holding up very well. I have been asking this all week. By for the next 12 months . Usualen a shells geopolitical problems, i think bp is going to be looking very fit after day. Thank you very much. It is good to see you. This is what else is going on. The bank says underline profit will decline because of regulatory and restructuring costs. Millionme to think 400 in productivity improvements. Return toto sustainable profits. Jump in theed a 41 Third Quarter. They were cut 9000 jobs in an effort to revamp the business. They will close 150 branches. More customers are moving online. Lloyds plans to cut costs by one billion pounds by 2017. Insss biggest bank came below estimates. Ubs set aside it to billion dollars for currency rigging it. We will see what the ceo needs has to say. Stay with the pulse. Bankitzerlands biggest posted profits after a litigation charge. European Business Correspondent carolyn had set down with the ceo. She joins us now from zurich. You set down with the ceo. There were plenty of cautious tones being struck. Youre right. They dont know where to focus this quarter. The Positive Side of things, you have the underlying business doing well. There are 14 billion swiss francs coming in. This is the wealth manager in the world. That is no small feat. Youve got money doing well in Investment Banking. Underlying, there is an uptick across all business segments. The Third Quarter was a positive surprise. Casas cautious about what clients are saying. They are more worried than they ever have been. They are worried about geopolitical risks and ebola and the overall economy stagnation. Litigation charge of 1. 8 billion swiss francs. That is five times what they had expected. It looks as though analysts are king at the half glass glass halffull. The litigation charge points toward ubs being ahead of the rest of the industry and settling investigations. Him. Ke about this with we are making progress toward a resolution of this matter. We are not controlling the timing or the full outcome and the financials. I think we are in a position to have better estimates about the officials. Expect that mean we can a settlement to be coming in the next quarter . Can you give us a time frame as to when you might be agreeing with regulators . We may be able to reach conclusions in the foreseeable future. Outcomes that are extremely difficult to predict. We are not in the full control of those timings and outcomes. We are committed to address the issues as quickly as we clan can move forward. This is an industrywide issue. You talk about in a statement that this is going to go on for the foreseeable future. These litigation risks and ongoing charges that the entire banking segment might be exposed to. Will we still be talking about this in five to 10 years . Are industrywide issues. It is difficult for us to make an assessment of how long it will take for the issues to be thatved in i have to say this is not going to disappear anytime soon. We have to use cautious language. Not changing anytime soon. Really trying to highlight the concerns he has about litigation charges and the concern he has about the economy. He sounded negative to me. The street is resolutely optimistic area he told to he wants more political action. What does he mean by that . This is something i wanted to dig in. The ecb is trying to help weather the storm. We have quite of easing from the United States and england. They are splurging. Get from the leader of the wealth manager of the world, does he want more from the ecb . He focused more on that he wants more from politicians. Havethink Central Banks been doing a good job to mitigate the headwinds coming from the fact that europe is facing a severe structural problem. I dont think ecb on its own can resolve those issues. Policymakers and politicians need to address structural issues. Ecb can help this process. If they are left on their own to address the issues, i am not sure we will have a final resolution of the matter. He said it had been a long day. Seem upbeat. He was highlighting all the cautions and the nervousness that he had from the third term. It looks as though investors are focusing on the Silver Lining. They are focusing on the numbers and growth in the United States and asia. Theyre focusing on the fact that despite this 1. 8 billion swiss franc charge, they still posted a profit. Where there is a prophet, there is a dividend of that profit. Money is going to be going back to investors now they have been able to build up their capital base. They can weather the storm. They are still able to post a profit and have a sturdy capital base underneath them. It looks like it is glass half full. Thanks. Tired and a zurich looks cold. Back itshis gailey Branch Network by about 6 . With that goes 9000 jobs over the next three years. Us is jonathan pryce. In terms of delivery on it margins and bottom line, it is doing well. The other issue is revenues are going slower than costs. BiGoing Forward, the question for lloyds is at the back of the stress test. A lot of people are talking about them being tougher. This that concern this place . Thee know they are one of toughest regulators in the u k. They reported a 12 rate yesterday under the eba address. What will the strategy be . Triggers. Get bond investor, you bailed in and you charge more to fund the bank. It is material to lloyds for the cost Going Forward deflation was not in that adverse scenario. It contains a drop off in house prices. Lloyds is exposed to that. Lex they are extremely exposed. Compared to the eurozone and the states, they are much much better. It isf things like a massive issue. We have real concerns over it. That could be the shoe the drops. Lloyds is kicking things off for us. , who sets up the best for the next 12 months question mark i cant they were share prices will go. In terms of what is in the share prices, lloyds has going to have to deliver. If you look at who is struggling, they are trying to deliver. I think the messicks got a lot to domestics has got a lot to prove there and barclays needs restructuring. That is a key play. It has all the Investment Banking and capital issues. It is hard to say. World bank and londons have lloyds have performed well. The others are struggling because you cant deliver what they have been. Always a privilege and always a pleasure to have you with us. Lets get some company news. Product post a profit for the Third Quarter. The company clashes with management overselling a drug. The swiss drugmaker posted a 9 rise in sales. Drugse from three new expanded by 20 . Another quarter of slow user growth. They could lose 23 . The company has replaced executives. They introduced new products. Reassured. Ere not the stock fell 11 . Up, what is the best way to catch the attention of gamers . We will talk to the israeli startup that thinks it has the answer and why closing the gender gap will be good for big business. We will talk to the ceo. Welcome back. On Bloomberg Television and radio print we are streaming on your tablet and phone. We are live on every platform you can think of. It is time to check in on the markets. Equities are higher across the board. Lets bring up the one that matters. Forget european stocks. The Swedish Central Bank cuts rates more than people expected. It is down by 25 basis points. The expectation was 0. 1 . Inflation is too low for the Swedish Central Bank. They have cut their inflation. They have push back their forecast for the rate hike to the middle of 2016. They are down against every major currency. Coming up, closing the corporate prevent theould next financial disaster. We will talk with helene up morsi. Were looking at the drama behind the companies doors. That is next. Welcome back. Were live from bloomberg in london. I am Jonathan Ferro. The u k. In they swept the parliamentary elections over the weekend. The ukrainian president says Coalition Talks should take no longer than 10 days. Russias considering emergency aid by wartorn regions in the east of the nation. They call the situation bordering on humanitarian catastrophe. House officials have issued stricter guidelines on ebola. Anyone with direct exposure to the virus should be isolated in their homes for 21 days. Stop short of mandatory quarantine. They apply to Health Workers returning from west africa. That is the message from one of the bank of englands deputy governors. She says the behavior of some traders is shocking. She said the confidence has been damaged by unacceptable abuses. The bank is looking into tighter regulations that might include boehner bonus restrictions. Talk tech print your eyes are worth a lot of money to advertisers. Videong the attention of games about the noise is not easy. An israeli startup says it has the solution. Good morning. I am joined by the ceo and cofounder. Tell us exactly what it is that you do. It is an advertising company. We develop Advertising Solutions for mobile games. It stands for dynamic. It is about selling the right content to the right user. Someknow weve got videogame footage that shows you couple having a shoot them up. He is offered a pizza in the middle of the gameplay. How is that different from the way advertisers have traditionally tried to reach the eyeballs of people playing video games . We use a combination of algorithms and user profile. Tells you what content to win content and what not to. You dont want to interrupt the gameplay. You know when that person might be thinking that they are a bit peckish and they might fancy something from mr. Pizza. The content is combined with the gameplay. It is not only a pizza, it is the pizza sponsoring an activity within the game. It is a booming industry. 2. 7one service is worth billion. The forecast are quite wide ranging how fast are you growing . You are profitable. Woobi was profitable from day one. It was fully funded and we have a growth rate of 120 . Bright hope for the future. You opened an office in london. Where you seen most coming from . Is a very popular industry. We work in 130 countries worldwide. Markets are the emerging markets. You are profitable. You have been self funded from the start. Any thoughts of raising more money and help accelerate your expansion . We are under no pressure. We are growing up nicely. People approach us and were looking into it. It is premature to talk about. People might have detected from your accent that you are an outsider in the israeli startup. You are a woman. How do you find that in leading a company in this country and this culture . Is it to your advantage . Is it tougher to get hard heard . I am really here just to document the company. We wish you the best of luck with that. Woobi. The cofounder of you may find an ad courtesy of them coming your way. That is something i look forward to. The shares are lower, especially if you look. Sam szell he is here. I want to talk with santa fee. What you looking at . I am looking at a diabetes business. The reality is nothing happen. There is no smoke without fire. And a percent drop in the share price isnt going to be helpful today. It is a 2 of the revenues in the Third Quarter. It is likely to be one of the biggest traffic generators. For the drug 34iness from this grew million euros. Without the growth, drug sales would have been down on a yeartoyear basis. This is what the share price is reacting like this. They have been competing on price and rebates in the u. S. Market. We look at one of the competitors is also down. Is this the price war between these two companies . Read the comments and take a face value, they are seeing competitive pressure. Secured contracts and have had to give away lots of highlevel rebates and discounts. Not only have they been are good for lower prices, they lost some of it. That is what this read through is. Has brought new medicines to market and has done terrifically well. The stock is up. What are the thoughts behind that company right now. They are grappling with a patent exposure right now. They were down 50 year on year. Pharmaceutical sales were flat thatightly up here in comes from the sales of the other products that are growing. That is really nice. They beat analyst forecasts. What is it driven by . Some is by sales. R d andes some from some from sg in a. Is now at the lowest relative to sales since Third Quarter of 2006, how much further can this go . How much lower can sg in a go . One has to wonder if that is going to be a focus for questions at the Earnings Call that is coming up. How sustainable are these earnings . Youre going to talk to me about that. This is the man i call what i want to know about pharma. President is promising big changes. Have an exclusive interview in the next hour. Stay with us for that. Welcome back. Were live in a bloombergs european headquarters. My next guest is at the summit. More women in the wardroom table will help prevent the next big financial disaster. Oining us is Helena Morissey it is always a pleasure to have you on the show. Tell me what is on your agenda. Started the day with a breakfast on the issue of women in business and philanthropy. This is a global phenomenon that we have a shortage of women at the top. That there issure a pipeline of female talent coming through. It is a theme. Talk to me about the improvement we have seen the we have seen tremendous progress. Nearly 23 of the 3100 total directors now are made up of women. Going forward, can we get this to 30 . Deathly. I think it is a mindset shift it is a real ingredient to having more Effective Boards. This is a business issue and not just a womens issue. Effort to consistent get there in the u k. I hope we will get there by the end of 2015. If we dont, it will be close enough. When we talk about boardroom behavior, one of the topics has been what is happening at tesco. But people are talking about an issue with aggressive accounting. They have a number of females on it. Is this behavior unavoidable despite the gender and any quality issues . It is not a panacea to all ills. It is a start of a revolution and not the end. Tesco was only had one Board Evaluation in the last decade. That is not shared with investors. We are trying to piece together from an investment point of view clues to assess the board. There is a lot more to be done. Having more women on the board has opened up the question about what makes an Effective Board. There is a long way to go. I want to talk about the european breakdown of. It seems that the nordics are the ones doing this better than everybody else. Norway, finland, sweden. What are they doing that the rest of europe is failing at . Has is way ahead. They have a quota. They have a mandatory legal quota to have 40 of either gender on the board. Course, we are adjusted in sustainable change. Get 30 onsuddenly the board and thats a oneoff and there are no women coming through. Norway has only got 2 of its ceos as women. Theyre just not seen it women in executive roles. That is so important as a part of a companys culture. Europe, theinland isntry that stands out to me france. Over the been bashed last six month at the lack of labor reforms. Is this a bright sought spot for you as you look at france . They have a quota as well. They have gotten there by cheating. It really only matters if you have a real sustainable change. One thing that having women on boards has done is shake up the corporate governments and the conversation. A reform. Really i do want to disregard it completely, but you cant read too much into it. I want to talk to about the issue of age and diversity. The heads of these companies are around 60. Entry for anybody 30 or 40 is immensely high. Do we need to break out of that . Most definite. Thisethnicity, we want journey shaking up what it means to be a good candidate for a board. Some of the banks had to start with a clean sheet of paper. They had to build a team. You only if that kind of expertise if youre going to lower the age of who you consider as an Effective Board candidate. This is the next stage in the journey. An evolution of the board and what we need is a revolution. If we get that revolution, we will need some work done by whoever is in government over the next four years. As we approach the general election, are these issues being crowded out by other issues . Do you think there are individual parties that are doing this better than others . We have had crossed Party Political support for the idea of having more women on boards and women in senior roles. That is underrepresented. Disappointed and it would be shortsighted of key politicians to overlook or ignore the issue in the runup to the election. There is good evidence that winning the womens vote could be a deciding factor. Thank you very much for joining us this morning. It is not just a womens issue, it is a business issue. It is time to switch gears and talk about social media and twitter. Their thirdquarter sales beat estimates. Ofy reported another quarter decelerating user growth. This has put pressure on dick costolo. Hans nichols joins us from berlin. , no beals line is knows what to do with this platform. That is still a problem for them. They dont get it. This is the same conversation you may have had with her about facebook three or four years ago. Not to bring your mom and to this, people would have joined facebook. Has 284. They need to be adding many more users on a month on month, sequential basis. We have seen a 5 growth. Revenues are up. You mentioned the number 361 million. They are not seen the growth that is going to really drive their future revenue. That is why the stock is under pressure. It is down 12 yesterday. It is going to be in testing to see how low it opens later on in the states today. There were some good numbers. At International Revenue was up 34 . Revenue for aad thousand page the use was 1. 77. They are monetizing it a little bit better. They are not adding users as quickly as they would like to. That is the challenge. We will ask dick costolo in an interview that we might be up for. At 12 30 p. M. I am not that kind of guy, i promise you. There is a the guy in the news room the does that. Fromg up at the comments Deutsche Telekoms ceo. He spoke this is a reoccurring theme that we have every time a major tech sector gets to complain about google and talk about an unfair playing field. This is what happened yesterday. Google has almost a monopoly. This is the challenge. If there is going to be pressure on merkel and the new team in the eu, google has so many outstanding cases and the constituency for these politicians includes big business, they are arguing for more leveling of the playing field. It is a difficult political environment for google in germany and europe all the way around. Its a difficult environment for everyone. Coming up, wind and solar are powering forward. We will tell you who is leading the Renewables Race when we come back. Stay with us. Welcome back. We are live on Bloomberg Television and radio and streaming on your mobile device. Energy, first solar and Acme Solar Energy are poised to win licenses to build plants in india. Powerre pledging to sell at one third cheaper than the global average. Invest in the project. Developing countries are beginning to take the lead in green energy advancement. Of solar plants and wind farms are begin to outpace the larger nations. China is considering raising taxes on fuel and inefficient cars. Encouraging consumers to buy alternative energy vehicles. For those listing on bloomberg radio, the first word is up next. A second hour of the pulse is coming up. Exact r bp executive, the earnings are in. Then we have an interview with the brazilian bank. What does it mean for markets and business . We will be live with michael milken. You can follow me on twitter. Is back in just a minute. These are the markets for you. Bring in the currency moves after the break. Stay with us. Politics, science clash. Oil spends much of monday below 80 a barrel. Twitter, theyre not facebook, call it desperateforgrowth. This is bloomberg surveillance. Tuesday, october 28, i am tom keene with scarlet fu and brendan greeley. Some top headlines today, the number one story across this nation, ebola. U. S. Response to ebola eating anything but coordinated. New guidelines were chatting people with the disease. The governors of new york and new jersey said they are not enough. Here is the cdc director. With these guidelines, we are engaging in a series of discussions with state and local governments. We find state Health Departments generally to follow cdc guidelines. If they wish to be more stringent than what the cdc recommends, that is within their